How to Make a Loyalty Program Work

Over 80% of the population belongs to some form of loyalty program. The average US household actively participates in 6.2% loyalty programs, (source: Colloquy, 2009). Whether it is your card that is swiped at the grocery store to get weekly discounts, the airline miles you accumulate when you travel, the points you receive each time you rack up your credit card, chances are you belong to a variety of loyalty programs.

But does being a part of a loyalty program make you more loyal to that business? Some say “yes”, but most say “no”.

Loyalty programs can be part of your comprehensive client or patient relationship strategy. But having a loyalty program won’t make your clients loyal. Client and patient loyalty comes from the value your product or services provides and the emotional connection your customer has with your business. A loyalty program can assist in creating value and the emotional connection.

Often times, businesses do not put enough thought or strategy into their loyalty programs and they end up looking like everyone else’s, rendering little or no meaning to the client or patient. You want your loyalty program to be more than just a “rewards” program. It should add value to your product and service.

The underlying objective of a loyalty program, (and how they were originally used), is to accumulate information on buying behavior. But beyond this valuable information, other objectives of your program should be to:

The focus with any loyalty program needs to be profitability. The key to loyalty marketing is relevance to the consumer. The size of the reward is not as important as its perceived value. Consider these elements as part of your loyalty program:

Surprise Rewards
Special Treatment
Special Recognition

Your program needs to have teeth rather than it just being bigger, better, or easier. That is the norm and what your client or patient expects today. Most loyalty programs are now commodities. There is no differentiation between them for them to be meaningful to the consumer.

Think in terms of client/patient “experience” rather than “tangibles” when crafting your loyalty program. This will keep your program from looking like everyone else’s.

Here is a step-by-step outline of basic fundamentals in creating a meaningful, value-driven loyalty program.

Outline your positioning. What do you stand for? What do you offer? How do you want to be perceived?

Determine the target market. Who is our highest margin client/patient? What other targets should we consider?

Determine the program benefits. Make sure these align with the overall client/patient experience you want to create. Benefits can be cash/products or special privileges or a combination.

Program details. How will clients/patients enroll? How will they earn rewards? How will they redeem rewards?

Outline your communication strategy. How will you get the word out there? How will you keep current and potential clients informed of your program?

Evaluation and Measurement. How will success be measured and over what time frame? How will the data be captured? How will the data be analyzed?

Which one most relates to your marketing efforts?

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